It has also helped HgCapital, which in 2004 acquired the company from LDC – the buyout arm of Lloyds TSB – to make nearly three times its original outlay.

Not surprisingly, perhaps, the investment is regarded by some as a model case for the long-term success that private equity can create for UK businesses.

HgCapital partner Nic Humphries, who led the transaction, said: “When we bought Iris from Lloyds, it was the number one in supplying software to firms in accounting practices, with a market share of about 30% in the UK.”

Iris has expanded to offer small to medium-sized enterprises subscription-based software to manage their accounting, human resourcing and payroll systems. It also supplies organisations in the charity and legal sectors. When Hg put Iris on the block, it had not anticipated that CS Group, taken over this year, would also be attractive to potential suitors. But the two companies were of sufficient interest to the US private equity group for it to want to buy both, pushing it into the realms of a mega-buyout.

Jonathan Evans of UBS, which advised Hg on the sale, said: “As a tertiary buyout which started life with private equity backing when Lloyds Development Capital bought it in 2000, this business had picked up a loyal fan club along the way, leading to a highly competitive auction with more than 18 bidders in the first round.”

Investors in Hg’s fund, which made a gross return of £239m (€354m) on the sale, were not the only parties to benefit. According to Humphries, as well as the management of Iris and CS, more than 200 employees were given equity options that would enable them to “pay off a modest mortgage”.

Sources said a lump sum of between £12m and £14m was paid to staff who had acquired shares at a discounted price. Humphries said: “This is something we have also sought to offer employees of our other portfolio companies.” In the case of Iris, it may sweeten their view of being part of a larger company.

HgCapital acquired CS, which provides document management and customer relationship management applications, with a view to merging it with Iris, according to sources. But the timing did not work out, so Hellman & Friedman stepped in.

Evans said: “Looking at the two companies together meant that, in addition to the impeccable strategic rationale behind merging CS Group’s capabilities with those of Iris, Hellman & Friedman could put more capital to work and boost the deal to a size that was more in line with its $8.4bn fund.”

Iris was bought by Hg at a time when few software companies were being purchased, according to Humphries.